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Ecuador turnaround. Ecuador's President Jamil Mahuad just announced the dollarization of Ecuador. He got rid of all the central bankers and adopted the U.S. dollar as the national currency. If history is any guide, this could turn out to be the mother of all buy signals for Ecuador. Look what happened to Argentina when it's currency was linked to the dollar in 1989. By the late
1980s the country was suffering under 3,000% inflation. Desperate times
called for desperate measures, so Argentina stripped the power of printing
money away from its central bankers and tied its currency to the dollar.
Stripping the power to print money away from the central bank was the best
thing that ever happened to Argentina. From 1990 to 1992, bottom to top,
Argentine stocks rose 800% in dollar terms. Today Argentina has no inflation
and economic growth has averaged an amazing 6% a year for the decade. Ecuador
could follow down this same path. Dollarization for Latin America
makes sense for one simple reason - nothing better can be done to make
these economies boom wildly with little or no repercussions. Interest rates
in Latin America will be cut in half, currency risk will disappear, companies
will have easier access to cash, and people will be able to borrow money
freely. This would eliminate uncertainty, peso crises would disappear,
and by taking the power to print money away from these emerging market
governments, it would force discipline and reforms, instead of printing
money to pay new debts. The upside is huge and the downside is negligible.
The only thing stopping it from happening is greedy Latin politicians.
But Ecuador just dollarized. What a great first step. It dollarized in
crisis (this is usually the way it happens). Ecuador's currency has lost
35% of its value since January 1, 2000. It's the culmination of many bad
things - the country defaulted on its debt last year, the economy contracted
by 7% in 1999, and the government tried to solve a banking crisis by printing
money but all it did was create runaway inflation. Ecuador is in severe
crisis. But Argentina was in crisis a decade ago, and its stock market
rose nearly 800% in 3 years, to ultimately become the best-performing country
stock market of the decade. With a potential replay in Ecuador, those of
us bold enough to step up to the plate could be rewarded handsomely.
Stay tuned for more.
Free Portuguese dance lessons. The glossy Portuguese brochure we saw called the event an afternoon dance. Held at the local cultural center, it was free admission, from 5 p.m. to 8 p.m. It featured live music by the 18-piece Happiness Orchestra of Light and Glory (my translation). The picture showed a dreamy young couple slow dancing, holding each other tight. Vicki and
I decided we had to go.
Single men wandered through the crowd, looking for that special someone. And the next and the next special someone. There were maybe two women for every man. One 75-year-old man asked a heavy, stout, 70-year-old woman to dance. She had a figure like a sack of cement, but a pretty face, engaging smile, and a determined manner. By the time she heaved herself out of her chair, got her coat off, squared her hips, and negotiated the two or three steps to the dance floor - the song was over. But no matter. Her suitor waited patiently. I got the impression he was used to waiting patiently. The couple stayed out on the floor, and when the band struck up the next number this pair was ready to hit it. The Happiness Orchestra of Light and Glory, with players at least as old as the dancers, played American hits from the 1930s and 1940s - those by Glenn Miller, Benny Goodman, and Artie Shaw. It played with heart, but slower than you've ever heard a band play. This band more closely resembled a coma than it did the Red Hot Chili Peppers, who, coincidentally, were playing later, across town. It wasn't even Lawrence Welk’s band; although admittedly, Lawrence Welk played to a younger set. Still, the music was familiar, and the crowd was lovely and appreciative. Vicki and I,
no dancers, left after the first set. The rest of the group headed to the
bar for cookies and sandwiches. I suppose they were still going strong
at 8 p.m. for the last dance, lights out, and time to go home, maybe with
a new friend, maybe not. Whatever, it was great fun, a hot Saturday night
in Lisbon, mixing it up with others, enjoying what life had to offer.
Invisible stop signs and lost purses in Nicaragua. My wife and I made a series of refreshing discoveries in the land of volcanoes and lakes, Nicaragua. The first was the demeanor of the people. The enthusiasm for their country from all those we met was genuine and refreshing! It was like a sales pitch without the closing. Wonderful! The second discovery was the interesting local custom of a complete disregard for stop signs. There were simultaneous collective brake applications in the bus at each unheeded stop sign until the culture shock wore off. Our next discovery:
People here return lost stuff. Jane set her International Living tote bag
down at the hotel in Granada and forgot to take it with her. It contained
her wallet and other treasures and trash. We made phone calls but had no
luck. Then, out of nowhere, we were notified that the tote had been found
and returned. I am pleased to report that 80 percent of the cash, as well
as all of the credit cards and other material, was returned. Remember,
the equivalent of a year's per capita income in cash was in her wallet!
The small amount subtracted along the way was commission money for the
bucket brigade that spanned from the street back to Jane. I can think
of no better referral on the character of a place than this incident.
Don't stay in Sydney for the Sydney Olympics. Thousands of overseas visitors will be coming to Sydney in September for the next summer Olympics. All of these people will need somewhere to stay - and most will choose the city's central hotels, where prices will rise with the demand. A better option is the suburb of Manly. On a map, Manly appears to be distant from the action, but it is actually a leisurely - and cheap - 30-minute ferry ride to the central Circular Quay. Manly has a nice range of reasonably priced hotels and a great beach with a 10 kilometer walkway. For a cheap
hotel, try the Steyne, if you have young children, try the Manly Beach
Resort, which lets kids under 7 stay free. A stay in Manly is much more
relaxing than a stay in the crowded center. For more details, write to
the Manly Visitor's Bureau, Ocean Beach, Manly, Sidney, NSW, Australia.
Or go to http://www.pcn.com.au/, Manly’s
visitor's web page.
Discount
chalets
One reader writes: "The truth about crime and violence in Panama" Dear IL: This is regarding
the note from Bob Kephart from Tampa, Florida, regarding luxury apartments
in Panama. He stated that there was virtually no crime. I am afraid that
he has oversimplified the situation.
I have some family in Panama. Crime there has reached such a point that homeowners cannot leave their homes unattended. It is very common to have armed guards in every house. This in all reality does not sound like the Panama that Mr. Kephart was talking about. Please advise
your readers that Mr. Kephart’s report was slightly optimistic, and did
not present a true picture of Panama. Thank you very much.
Panama City resident and IL contributing writer Roger Gallo responds: "I've lived in a number of countries around the world, and I can state that Panama is the safest place I've ever lived. Panamanians are gentle people. " Robert Kephart has also traveled extensively and is in fact one of the most-traveled individuals I know. He and I shared a dinner in Panama City recently after which I walked him back to his hotel room. We walked through Panama streets at midnight talking about Panama and other cities in the world. Having lived here two years, I've had the opportunity to travel the length and breadth of Panama. In those two years I have never encountered crime or violence. Everywhere I've gone I've been treated with dignity and respect. The statistics show that Panama has the lowest crime rate in Latin America and one of the lowest violent crime rates in the world. There is more crime in New York City in a single day then occurs in all of Panama in an entire year. Those are the facts. Yes, there
are armed security personal everywhere. Security personal prevent crime;
they don't prove its existence. I can also state that the police in Panama
are helpful to a fault. They treat everyone with respect and answer questions
politely. If you want to see crime go to Portland, Oregon, where if the
thugs don't strong arm you the police will. In short, there is no spot
on this planet that is absolutely safe, but if you want to find one of
the safest spots, come to Panama.
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